As mid-term elections approach and presidential primary candidates begin looking toward 2016, we can expect the usual posturing for the senior citizen vote. In the last presidential campaign, we heard President Obama attack former Massachusetts Governor Mitt Romney’s Medicare reform proposal while Romney attacked Obama for cutting Medicare as a part of the Affordable Care Act. While national leaders fear that any proposed reform to Medicare or Social Security will be perceived as a threat to our most vulnerable citizens, we must have a responsible national conversation that leads to concrete and bipartisan entitlement reform. If reform does not occur, America’s younger generations will ultimately end up paying the price.
In 1970, Medicare and Social Security accounted for less than 20% of the federal budget, according to the Congressional Research Service. Today, these programs comprise approximately 40%. Meanwhile, government spending on investments, which include financing infrastructure, research and development and education has fallen to 15% today from over 30% in 1970, according to Third Way. By 2030, entitlements are expected to consume nearly 60% of the budget with Social Security and Medicare claiming most of these costs. The massive spending jeopardizes the sustainability of our nation’s entitlement programs and has taken away the government’s investments in innovation, investments, and education. It also contributes to our ever-growing national debt and will soon result in both massive tax increases as well as spending cuts. We may come from different political perspectives, but we both agree that action must be taken to address these crucial issues.
Clearly, something has to give. Two of the major drivers of entitlement spending are Medicare and Social Security. We must ensure that both programs are fairly and adequately funded for our parents and our grandparents while we sustain them for future generations.
Medicare currently operates with a fee-for-service model that many experts believe creates perverse incentives by rewarding doctors for prescribing more expensive procedures. It’s important to incentivize advanced-payment and care-delivery models that reward quality and value rather than quantity of care. It’s also important that Medicare undergo structural changes that promote efficiency– for instance, by combining Parts A and B, introducing cost-sharing for prescription drugs covered by part C, and by modernizing the Medicare benefit package.
It is critical to emphasize and incentivize health and wellness as well as participation in prevention programs so patients can receive treatment for maladies before they require expensive care.
Similarly, millions of America’s elderly including our grandparents rely on Social Security, so it’s critical to ensure fairness and solvency with whatever reforms emerge. Currently, the retirement age will gradually increase from 65 today to 67 by 2027, but to address the increase in life expectancy and the upcoming wave of baby-boomer retirees, the government should gradually further raise the retirement age to 69 and index it to life expectancy in the same time period. To increase the solvency of the program through funding measures, we believe that one important option that should be on the table is to increase the payroll tax cap so that 90% of wages would be taxed rather than the current 83.2%, which would eliminate 28% of the long-term deficit, according to the Congressional Budget Office.
Another option would use chained CPI, a more accurate method of calculating inflation, as the basis for benefit increases. Finally, to lower costs while maintaining fairness, we propose lowering benefits for Social Security’s wealthiest recipients to protect beneficiaries who need Social Security payments most. There are a range of options on the table. However, the longer we defer action, the more our generation will pick up the costs and the less likely it is that we will earn the same benefits as our parents and grandparents.
While reforming Social Security and Medicare will be challenging, we need all generations and both parties at the table. Both Republicans and Democrats have proposed ways to address the long-term solvency of both programs. However, if we come together for a true conversation without the partisan or generational posturing, Americans could find a bipartisan, consensus-based path forward. It’s time for millennials to have a seat at the table with our friends and relatives as well as our elected officials. It’s time for us have the conversation.
Henry Sandman, a rising senior at Lafayette College, is co-President of the Lafayette chapter of Common Sense Action, a bipartisan millennial grassroots group focused on advancing generational fairness, investing in millennial economic mobility and repairing politics. CSA has 24 chapters across 15 U.S. States. Kathleen Gayle, a rising senior at William and Mary, is the president of the CSA chapter and the W&M College Republicans.